MarIus

3.3.1 Possibility for the owner and the master to refuse charterers’ orders

There is no general obligation for the shipowner or the master to verify the safety of a port they are ordered to visit. This approach is submitted in The Kanchenjunga case.^{(1) Coghlin et al. (2014), para 10.60; Kanchenjunga [1987] 2 Llyod’s Rep. 509; See also below 3.3.3, this study} However, they are permitted to take reasonable time to consider the safety of the port. The delay associated with this consideration will only be deemed as a refusal to obey the orders if it extends beyond a reasonable duration.^{(2)The Houda [1994] 2 Llyod’s Rep. 541, at 555}

Additionaly, the owners or the master have the right to refuse an order to an unsafe port because it is considered "uncontractual," as stated by Lord Goff in the Kanchenjunga case,^{(3)Kanchenjunga [1987]} or because proceeding to an unsafe port does not align with the terms of the contract.^{(4) Lensen Shipping v. Anglo-Soviet Shipping [1935] 52 Llyod’s Rep. 141 ; Coghlin et al. (2014), at 10.61} However, the decision to refuse the orders must adhere to the definition of “unsafety,” i.e, the vessel must be at risk of a danger inherent to the port itself, not due to abnormal occurrences, as exemplified in The Mary Lou case.^{(5) Coghlin et al. (2014), at 10.43}

Moreover, if the charterparty contains a war clause, drafted in the manner of CONWARTIME 2013 or VOYWAR 2013 BIMCO clauses, it will allow the owner to refuse compliance with the charterers’ orders if, in the reasonable judgment of the master, the port is deemed unsafe. The Russian military intervention in Ukraine would fall under the definition of "war" as per these BIMCO clauses, thereby justifying a refusal. In the case of “The Triton Lark”,(6) Pacific Basin IHX Limited v Bulkhandling Handymax AS, The Triton Lark [2012] 2 Lloyd's Rep. 151 which dealt with the risk of pirate attacks in the Gulf of Aden, clarifications were made regarding the interpretation and understanding of the CONWARTIME 1993/2004 clause, which was later amended. It gives an indication for when shipowners are justified in exercising their right to refuse to call at a port due to the presence of such risks.

In this case, the charterers instructed the vessel to transport cargo from Hamburg to China via Suez and the Gulf of Aden. However, the disponent owners, invoking the war clause, declined this route due to the risk of pirate hijacking. This risk was estimated at approximately 1 in 300 transits. The charter contained a CONWARTIME clause. To rely on the clause, the master or owners must form a reasonable judgment to assess whether, on one hand, “the vessel, her cargo, or crew may be, or are likely to be, exposed to acts of piracy” (war in the context of our study), and on the other hand, “if such acts of piracy may be dangerous or are likely to be or become dangerous” (in our case, war attacks such as mines or striking). The primary question revolved around the interpretation of the phrase “may be, or are likely to be, exposed to War Risks.” The judge highlighted the difference between a wording that implies that the vessel may be or is likely to be “attacked” by pirates (war acts in this case) and the wording that the vessel may be or is likely to be “exposed to” those acts. The latter formulation requires only “a single degree of possibility or probability.” The vessel is exposed to the risk, not to an actual attack. If there is any risk, the clause should, according to this decision, in principle operate without an issue. The risk must then be likely to be or become dangerous to the vessel, her cargo, crew, or other persons on board the vessel. It requires a risk that is sufficiently grave and serious.

The risk of a mine explosion or striking is undoubtedly serious and widely recognized as a war risk. It is the “risk that a serious event” will occur, and not “a serious risk that an event will occur,” that is required by the CONWARTIME clause. Therefore, the precise wording of the clause becomes critical. Given the current situation and the aforementioned hostilities, it is highly probable that a serious risk of a mine or striking event occurring against ships entering the Black Sea will be acknowledged. Owners may invoke war risk clauses to decline visiting such ports. Additionally, BIMCO states in their website, that “under the current circumstances, we believe that owners should have the right to refuse to transit Ukrainian/Russian Black Sea and Sea of Azov waters or call at ports in that region.”^{(7)https://www.bimco.org/Insights-and-information/Contracts/20220224-Ukraine-situation}

If the situation in the region stabilises or grain trade resumes, the question arises whether shipowners can still rely on war risk clauses. The continued hostilities between the two countries and ongoing strikes offer no assurance that mines have been cleared. Even with a stabilisation of the situation, the lingering risk of hostilities resuming would be sufficient grounds for owners to refuse charterers' orders to call at a port in the Black Sea based on a war risk clause in the charter.

In summary, while shipowners and masters are not generally obliged to verify the safety of a port they are ordered to visit, they do have the right, and in cases where the risk is obvious, the obligation, to refuse such orders^{(8) See below 3.3.3}. Moreover, under war clauses like CONWARTIME 2013 or VOYWAR 2013, the mere existence of a serious risk is sufficient for shipowners to refuse visiting a port deemed unsafe, without needing to prove a high probability of that risk.

In situations where a port is unsafe, the owner could, in certain cases, face criticism for complying with the orders of the charterers.

3.3.2 Complying with calls to unsafe ports: potential repercussions for Owners

The issue in this section is to examine what are the potential consequences for shipowners if they deem a port unsafe but still choose to comply with the charterers' orders and proceed to that port^{(9) Note as well that the question of whether owners can exercise the right to reroute becomes relevant when considering port safety concerns. However, given the present circumstances, attempting to reroute vessels to avoid Russian or Ukrainian ports is not a feasible option, as these ports necessitate passage through the Black Sea, which is currently the epicenter of hostilities.}.

In The Saga Cob judgement, it is contemplated that a port should be considered unsafe unless proven to be absolutely safe. L.J Parker stated at p. 551:

“It will not, in circumstances such as the present, be regarded as unsafe unless “the political” risk is sufficient to a reasonable shipowner or master to decline to send or sail there”. (10)The Saga Cob [1992], at 551

Reading this a contrario implies that if the political risk is sufficient to justify refusal by a reasonable shipowner, then the port should indeed be considered unsafe. Does it mean that if the owners or master do not decline to approach the port, the port is deemed safe? Does it imply that the owners have accepted the risks associated with the port?

In The Saga Cob, a letter was sent immediately after a guerrilla attack on the vessel Omo Wonz, expressing the master's concerns about calling at the Massawa port and regarding it as potentially dangerous. However, in this case, the charterparty contained a clause allowing them to refuse to visit the port. Despite this, the judge noted that after this incident, the master visited the Massawa port multiple times and did not exercise their right to refuse. The judge draws the conclusion that the owners, not only accepted the risks, but also, that the master considered the port safe by visiting it several times after the attack. This situation raises the following questions:

Does proceeding to a port, despite having the entitlement to refuse due to unsafety, constitute a waiver of the right to rely on the safe port warranty? Would it be considered a waiver of their right to refuse to comply with the order?

As we have seen,^{(11) Below 3.1} there is no general obligation for the shipowner or the master to verify the safety of a port they are ordered to visit. If the charterparty contains a safe port obligation, the owner must be able to rely on the charterers’ undertaking. Additionally, it was decided that the owners’ compliance with the order does not necessarily imply a waiver of claims related to the port safety warranty; it merely signifies a forfeiture of the right to object to the order itself.^{(12) The Kanchenjuga [1987] 2 Llyod’s Rep. 509, [1989] 1 Llyod’s Rep. 354 (C.A.), [1990] 1 Llyod’s Rep. 391 (H.L.)} Thus, they might be able to claim compensation for any losses incurred due to calling at the unsafe port.

However, if the unsafety of the port is obvious, the owners are expected to act reasonably, either by not entering the port or by minimising any damage incurred. This approach to port safety is demonstrated in The Kanchenjunga.^{(13) Ibid, [1990] 1 Llyod’s Rep. 391 (H.L.) at 401 ; Coghlin et al. [2014] at 10.58 and Seq.}  Should the owners or the master undertake appropriate measures to mitigate the impact of a port's unsafety, they can seek compensation for these actions.^{(14) The Kanchenjuga [1987], at 401 ; Coghlin et al. [2014] at 10.62} Nonetheless, in cases where owners knowingly enter an unsafe port and treat the charterers' orders as valid, they may be deemed to have waived their right to claim a breach of contract and any resultant damages. In The Chemical venture case, the owners made a clear and unequivocal statement of their intention not to consider the order to proceed to the unsafe port as a breach of the safe port warranty. In that case, they waived their right to seek compensation for a subsequent damage.^{(15)The Chemical Venture [1993]} Additionally, it was held that if the owners clearly indicate their acceptance of the order, in some circumstances, it could be interpreted as a waiver of their right to seek compensation. This principle is further illustrated in The Product Star (N°2).^{(16) Abu Dhabi National Tanker Co v. Product Star Shipping Ltd., The Product Star (N° 2), [1993] 1 Lloyd’s Rep 397} The Court of Appeal examined whether owners could justifiably refuse to send their vessel, on a voyage in the Arabian Gulf during the Iran-Iraq war, under a war risks clause in a charterparty. Notably, the owner had already completed four voyages to the Gulf without incident and no change in circumstances was evident. Despite this, the owners refused orders for a fifth voyage. The court ruled that such discretion to refuse must be exercised reasonably.

Gay notes that even though The Product Star deals with a war risks clause rather than safe port warranty, the terms «safe» and «dangerous» are closely interconnected. Gay implies that the way «dangerous» is understood within the specific context of a charterparty could likewise influence the meaning of «safe» in maritime contracts.^{(17) Gay [2010] at 122; See also this view Johnston Brothers v. Saxon Queen Steamship Co (1913) 108 LT 564 at 565}

Considering the findings above, a key question emerges in our study: should the owner proceed to Russian or Ukrainian port if called there? The answer is rather complex.

As seen, if the unsafety is too obvious, the charterers' safety promise (explicit or implied) might be challenged, and it is possible that losses should be shared, particularly if the master is seen as negligent for obeying orders in a clearly unsafe situation. This was the perspective The Houston,^{(18)The Houston City [1954] at 15; [1956] A.C. 266} where it was submitted that the master's actions were the cause of the damage, not the charterers' orders. It can be legitimate to wonder whether the unsafety of ports in the Black Sea is obvious. One thing is clear: if a Ukrainian-flagged or crewed vessel enters a Russian port, the unsafety is obvious. But the dynamic nature of the whole Black Sea region requires specific timing assessments for safety. However, the view in The Houston case, is not universally accepted among jurists. Some argue that even if the master's negligence is presumed, it does not break the causation chain, leaving charterers liable. With a safe port clause, charterers undertake a commitment and should assume responsibility for calling a vessel to an unsafe port. Therefore, if owners, aware of the war risks, still proceed to Ukrainian or Russian ports, it might only be seen as waiving their refusal right, but they remain entitled to compensation for damages arising from the port's prospective unsafety. This holds unless they have clearly accepted the risks and, by their words or conduct, showed that they will not threat the order as a breach. Owners should be cautious; if they express skepticism about calling at a Ukrainian/Russian port but still proceed anyway, they may be seen as accepting the risks if the clearly aknowlegde that the order was not a breach, losing their right to compensation.

Additionally, if owners have been regularly visiting the area and then suddenly refuse a call to a Ukrainian/Russian port, they must reasonably justify this refusal. A change in circumstances might legitimise such a refusal, but this needs to be substantiated.